Anti Money Laundering (AML) in Sri Lanka
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|Sri Lanka is currently working to strengthen its Anti Money Laundering (AML) and terrorist financing regulations. However, the country still faces numerous money laundering threats, emanating from various illegal activities. In 2006, Sri Lanka underwent a Mutual Evaluation from the Asia/Pacific Group on Money Laundering (APG).
Sri Lanka has passed numerous laws dealing with combating money laundering. In 2005 and 2006, Sri Lanka passed three important acts related to money laundering: The Convention on the Suppression of Terrorist Financing Act, The Prevention of Money Laundering Act, and The Financial Transactions Reporting Act (FTR). The most important of these is the FTR Act, which established Sri Lanka’s Financial Intelligence Unit (FIU). Recently, Sri Lanka’s FIU gained acceptance into the Egmont Group, an association of international FIUs established in 1995.
However, gaps still exist in Sri Lanka’s AML efforts. Most notably, there are currently no regulations to monitor the activities of charities and non-profit organizations, some of which are used as fronts for money laundering and terrorist financing. Nevertheless, Sri Lanka has made great strides in regulating and combating money laundering in the recent past, and continues to focus on creating stricter and more effective rules and regulations.
The Economy of Sri Lanka
Sri Lanka’s economy has been hindered by the country’s 25-year civil war; however, in the last ten years, Sri Lanka’s GDP has averaged a growth of 4.5%, with the exception of a recession in 2001. From 2006-07, government spending on supplies and development drove the GDP to grow roughly 7% per year, however, growth slowed in 2008 due to the global recession.
Sri Lanka’s most lucrative and dynamic sectors include food processing, textiles and apparel, food and beverages, port construction, telecommunications and insurance, and banking. Roughly 1.5% of Sri Lankans work abroad, most in the Middle East, and send a total of roughly 2.5 billion USD a year back home.
Banking in Sri Lanka
Sri Lanka’s Central Bank was established in 1950 as the Central Bank of Ceylon, renamed the Central Bank of Sri Lanka (CBSL) in 1985. The Bank is governed by a board of five members, known as the Monetary Board.
In 2002 the Monetary Law Act (MLA), which had established the Central Bank, was amended, updating the Bank’s objectives to focus on two main goals: maintaining financial system stability and maintaining economic and price stability.
Within these two broad focuses, the Bank has many smaller responsibilities, including encouraging and promoting the development of productive resources, issuing and managing currency, and acting as economic advisor and banker to the Government of Sri Lanka. As the agent of the government, the CBSL is responsible for four major functions: managing the Employees Provident Fund, managing the public debt of Sri Lanka, administering the provisions of the Exchange Control Act, and administering government and foreign funded credit schemes for regional development.
Sri Lanka's Currency
The currency in Sri Lanka is the Rupee. The Rupee became Sri Lanka’s official legal tender in 1872, replacing the British Pound at a rate of one Rupee to two Shillings and three Pence.
The denominations of banknotes currently in circulation are 10, 20, 50, 100, 200, 500, 1000, and 2000 rupees. The denominations of coins currently in circulation are 1, 2, 5, 10, 35 and 50 cents and 1, 2, 5, and 10 rupees. Along with the standardized banknotes and coins, there have also been various commemorative coin and banknote series issued by the CBSL.
Other Key Statisics of Sri Lanka
Time Zone: UTC+5.5 (10.5 hours ahead of Washington, DC during Standard Time).
Location: Southern Asia, island in the Indian Ocean, south of India.
Population: 20.48 million (2013 est.).
Labor Force: Approximately 34.7% works in agriculture, 26.1% in industry and 39.2% in services industries. The unemployment rate is 5.2%.
Languages Spoken: Sinhala (official and national language), Tamil (national language) and English, which is commonly used in government and is spoken by about 10% of the population.
Trade Organizations: Sri Lanka is a member of the World Trade Organization (WTO).